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Post Info TOPIC: Coronavirus/one man ltd company


Senior Member

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Coronavirus/one man ltd company


Hi there, Ive had a quick look and couldnt find anything g on this I, along with many others, take a basic wage of £8000 and the rest in dividends - does anyone know where we stand in relation to government help? As far as I can see Im not self employed, I cant be furloughed, yet my income will be decimated, purely as my clients are in exactly the same situation

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Master Book-keeper

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Hi Chris, sorry to hear that.

A lot of one man bands will be in the same boat I'm afraid.

Still waiting to hear any details of how the job retention scheme is going to work in practice or whether Directors qualify.  If they do you will get somewhere in the region of £560 a month.

I also worry about the self employed, told to shut up shop and 24 hours later not a mention of any help so far.

 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Senior Member

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We are in the worst position, though I imagine a lot of limited companies will be set up in the next week or two...

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Senior Member

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Even if we do qualify we cant say were not working Even the new plans (grants, loans, 80%) are so sketchy on details as-to be useless. Im not sure how many companies can bank roll that until funds are finally received from the government, Im guessing in June/July

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Master Book-keeper

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ChrisBolton wrote:

 though I imagine a lot of limited companies will be set up in the next week or two...


 That wont help anyone.



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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Senior Member

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Really? Because we seem to be the only group receiving no help and paying corporation tax - something has to give

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Master Book-keeper

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Ah, but how does setting up a new limited now help? 



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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Senior Member

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Old co will be left to die, DS01 filed

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Master Book-keeper

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Do you mean by an attempt at tax evasion - not paying the CT deliberately?

I was thinking you meant S/e settting up via a limited.

Of course - anyone doing that who is a client then you need to report it.



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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Master Book-keeper

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ChrisBolton wrote:

Even if we do qualify we cant say were not working


I wouldn't class Office Holder duties as working.

Lets say client pays himself £200 a week through PAYE and furloughs his staff. I cant see any reason why his pay can't be furloughed as well if the Company can't trade.  Maybe a clawback if a dividend is declared over a certain amount.  Obviously it's down to Gov to put some guidelines down because at the moment no one knows either way 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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Leger wrote:


I wouldn't class Office Holder duties as working.

Lets say client pays himself £200 a week through PAYE and furloughs his staff. I cant see any reason why his pay can't be furloughed as well if the Company can't trade.  Maybe a clawback if a dividend is declared over a certain amount.  Obviously it's down to Gov to put some guidelines down because at the moment no one knows either way 


The Company cannot trade but has to be run by someone.  As a one man limited that office holder is the decision maker, with a position required under the Co Act.   Plus is not considered an employee.

If you have been furloughed who will make the decision to unfurlough you?  That decision is part of the 'work' an office holder does as part of his role.  If even having a furloughed employee coming in to cover an emergency situation is potentially breaking the rules then how can dealing with their duties not be classified in the same way?

Interestingly Ive seen comments such as if you paid yourself at the £719pm level then you have been asking for such pain, despite this being a legal way to optimise tax, yet I havent seen the counter argument for those sole director companies who have been paying themselves a market rated wage (with an employment contract). I bet there are some, albeit not many.

But as you say, everyone is just playing the usual lets try to guess what the hell government mean whilst we wait for formal arrangements to be put into place. With the problem that this time we have no input as to what those arrangements will be and we can guarantee they will not have thought through even 10% of the scenarious that a bunch of Accountants can put together, even before some of their clients get involved with the mate down el pub ideas.

We can but wait.

Plus hope!

 



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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Master Book-keeper

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I might be debating with myself here.

As a sole director you can claim SMP, so....?

Can could easily refrain from doing any work, ignore post, ignore emails for 3 months....would probably need to tell ALL of my clients to do one.

Think I need to lie down in a dark room.

If anyone sees the announcemnet can they pop it on here please as Im going to HAVE to go mostly off grid to get some ruddy work done (on a very tight deadline) whilst I still have some!



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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Senior Member

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This is exactly my point

80% for employed, some plan (possibly) for self employed - SSP for the rest?

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Master Book-keeper

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That said Maternity leave and SMP come to an end if the mother returns to work for the company, apart from 10 KIT (Keeping In Touch) days. So usually Sole Director/no other employees usually have to forgoe the SMP. Perhaps they could allow something along the lines of KIT days.

Anyway - best I can suggest is lobbying your prof body for them to lobby the government to put some fuller guidelines out (the system can roll later) but at least folk know what to put on payrolls now. Lets face it the prof bodies have more clout than each of us individuals.

Ive lobbied mine, but they seem to just want to put 'funnies' on facebook to cheer us all up!

Do have to be careful here though as this could come back to bit with the whole PSC issue.

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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Forum Moderator & Expert

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ChrisBolton wrote:

Really? Because we seem to be the only group receiving no help and paying corporation tax - something has to give


Why does something have to give?

Until last week they were looking at calling in Rentokil to finish off the extermination of one man limited companies (IR35 changes now deferred).

Do you really expect them to extend the assistance given to employers to personal service companies?

There are arguements that the governments stance on one man limited companies is completely wrong but at the same time if one wants to be perceived as a service business then one has to allow for times when there will be no work.

I have seen it time and again that one man bands regard the money as theirs rather than the companies so they take the lot leaving nothing in the pot for a rainy day. And trust me, the rainy days do come.

At all times you should hold at least three (but preferably six) months of reserves.

When you receive payments you should always put some to reserves. (I advise that you consider a third of your income as untouchable).

I don't understand the line at all about lots of limited companies being set up? Why would that make a difference at all? As a director of a limited company you cannot be unemployed even if the company is making no money?

Seriously, can you expand on your thinking on that one please as it sounds as though there may be a misconception out there that I am as yet unaware of that might need discussion.

Shaun.



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Shaun

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Master Book-keeper

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Shamus wrote:
I don't understand the line at all about lots of limited companies being set up? Why would that make a difference at all? As a director of a limited company you cannot be unemployed even if the company is making no money?

Seriously, can you expand on your thinking on that one please as it sounds as though there may be a misconception out there that I am as yet unaware of that might need discussion.

Shaun.


 I think what Chris is saying is because income has dried up (in some cases) the easy option will be to dissolve your Company and start afresh, rather than meet your obligations to HMRC and other creditors. I think in the present circumstances HMRC will be extremely lenient when it comes to repaying tax, and hopefully we will see some help given to shareholder directors who have taken dividends legitimately but will now be trapped in S455 if the Company ends up making a loss because of no income.

Totally agree that as businessmen and women we take the risk that things can go tits up but we also benefit when things go well.



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



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Even if the company had reserves to meet corporation tax liabilities, would the owner director seriously pay the amount due, whilst having no income?

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Forum Moderator & Expert

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ChrisBolton wrote:

Even if the company had reserves to meet corporation tax liabilities, would the owner director seriously pay the amount due, whilst having no income?


Yes.

The income tax liability or for that matter VAT liability does not belong to the owner of the company.

Suggesting that payment of taxes is an option is quite dangerous ground.

Increasing salary (an expense) reduces tax exposure. The arguement that you are suggesting is around payment via dividends from profit. If there is no money to pay dividends how is witholding it of any benfit?

 



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Shaun

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Senior Member

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To be honest I dont think we will agree on this, Im talking about real world solutions

To summarise:

No help for one man band limited company's
Most don't pay business rates so no grant
Personal guarantees required for any loans
Possible 80% due of minimal salary paid
Any income received for the next say 6 months would be used for living, not paying any tax due. I dont see any other companys actually paying HMRC anything, they are actually reciving a net income from them





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Senior Member

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Agree about what?

Are you suggesting clients steal money that is not theirs? They have options to 'borrow' that CT money to live....so what are you recommending to enable them to do that and I don't mean the CBILS.




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Caron



Master Book-keeper

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ChrisBolton wrote:

To be honest I dont think we will agree on this, Im talking about real world solutions

To summarise:

No help for one man band limited company's
Most don't pay business rates so no grant
Personal guarantees required for any loans
Possible 80% due of minimal salary paid
Any income received for the next say 6 months would be used for living, not paying any tax due. I dont see any other companys actually paying HMRC anything, they are actually reciving a net income from them




In reality are many actually receiving ANY cash from government yet? The bliterhing details are not out, oh apart from the rates issue.  

Directors should not just use the CT to pay their own bills, for the reasons given by Shaun above, its not the Directors money, but also for the reason alluded to my Caron below. Once you have put the mechanism she mentions into place then you can take some of this to use to pay your wages, but bearing in mind the bill is still due and HMRC can come after you personally if you are excercise preference.

But also there is the fact that such Directors have been milking the system and paying NO TAX for years. So on what basis should they get any help?

''Any income received for the next say 6 months'' can be used to pay their wage and reduce their next batch of CT.   Although, I suspect you didnt actually mean the word 'income' and are mixing up the terminology between what is the Limited companies and what is the Directors. Many sole Director companies often think of the Limited bank account as their own and this is where they go wrong.

Real world - Clearly if they have CT bills they cannot afford then they have been making some decent money!why have these Directors not been building a next egg? An emergency fund?  Why have they stripped their business of all its cash?     I will hazard a guess that many of them have a huge TV on their wall and a decent car on their drive.  Sometimes folk have to take responsibility for their past actions.

As an Accountant you should be warning clients of their responsibilities under the Companies Act, guiding them to the help that is there (see note from Caron!) and following your responsibilities under MLR if anyone knowingly closes their company down whilst not paying their dues, in due course.  

Im not saying I dont feel for these people and I get that it is hard, but as you feel so strongly - what actions other than posting on here have you taken?

Have you lobbied your prof body? Or do not have a prof body?

Have you set up a Change.org thingy to get help for sole director companies? (as that is where the one the Lib Dems were pushing for a couple of days ago came from, mind you it did get kicked to the kerb was it Tuesday or Wednesday? Losing track of time!)  If not - then do it, post the link on the forum in a new post and I will likely sign it!   

Have you lobbied your local MP?

 



__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Master Book-keeper

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ChrisBolton wrote:

Any income received for the next say 6 months would be used for living, not paying any tax due. I dont see any other companys actually paying HMRC anything, they are actually reciving a net income from them


You have 9 months from the end of the financial year to pay your tax.  If you're using the income over the next 6 months to cover your living expenses absolutely fine, it will reduce overall/eliminate profits and ergo the tax bill.

Still struggling? Contact HMRC and make an arrangement to pay.

DS01 should be the last resort, not the first. 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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Leger wrote:
ChrisBolton wrote:

Any income received for the next say 6 months would be used for living, not paying any tax due. I dont see any other companys actually paying HMRC anything, they are actually reciving a net income from them


You have 9 months from the end of the financial year to pay your tax.  If you're using the income over the next 6 months to cover your living expenses absolutely fine, it will reduce overall/eliminate profits and ergo the tax bill.  Quite! Plus as I said. Although I think Chris mightve meant cash reserves kept for the CT in this case.

Still struggling? Contact HMRC and make an arrangement to pay.    What Caron alluded to.

DS01 should be the last resort, not the first.              not if you have liabilities, without having gone down the proper route


 



__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Master Book-keeper

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Cheshire wrote:

DS01 should be the last resort, not the first.              not if you have liabilities, without having gone down the proper route


 


I agree that the proper procedure should be followed.  



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.

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